VAT exemption

An overview of the VAT Reform

The Value-Added Tax (VAT) has been carefully introduced in China since 2012, starting in Shanghai and spreading in the whole country. After 2 years and more than 500 regulation changes, the VAT reform is about to enter its very last phase, seeing the total removal of the Business Tax (BT). Understanding how the VAT works has, therefore, never been so important, as this tax bears both high risks and opportunities.

Current state of the reforms

Shanghai VAT Pilot Program: Zero rate and exemption clarified

China’s Ministry of Finance (MoF) and State Administration of Taxation (SAT) have released an update to the VAT reforms under the Shanghai pilot program. The announcement clarifies issues regarding the application of “zero VAT rate” and “VAT exemption”.

According to the guidance—Cai Shui [2011] No. 131 issued on Dec 20, 2011,the following VAT applicable services provided in pilot areas are subject to the zero VAT rate:

Beijing - Shanghai - Shenzhen - Hong Kong - Paris
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